Possible inflow of funds into bitcoin-ETF estimated at $39 bln over three years

Analysts: Bitcoin-ETF will attract $39 billion to the cryptocurrency industry in three years

According to analysts' estimates, in the first year of bitcoin-ETF's existence, the inflow of investments may reach more than $14 billion, in the second year it may increase to $27 billion and grow up to $39 billion by the third year

The potential influx of funds into a Bitcoin Exchange-Traded Fund (ETF) is estimated at $39 billion over a span of three years, according to analysts. They predict that in the first year of the ETF's existence, investments could surpass $14 billion, rise to $27 billion in the second year, and reach $39 billion by the third year.

A supported Bitcoin spot ETF might draw in $14.4 billion in investments in its inaugural year, potentially driving up the cryptocurrency's value by 74%, as per a report from Galaxy Digital.

Various ETFs, such as those linked to gold, have trillions of dollars in assets under management. Within the cryptocurrency community, there's a common belief that even a small portion of this capital can have a substantial impact on the global crypto market. The approval of spot Bitcoin ETFs is expected to increase demand for the cryptocurrency, as purchasing shares in these funds entails the direct acquisition of Bitcoin in the market, influencing its exchange rate.

The report's authors anticipate that investment inflows could grow to $27 billion in the second year and reach $39 billion by the third year of the ETF's existence.

Experts believe that ETFs may offer a more attractive investment option for investors compared to trusts and futures currently available in the market. Existing products have notable drawbacks, such as high fees, limited liquidity, and restricted accessibility for a broad range of investors. In contrast, an ETF could be suitable for anyone interested in trading digital currency without actual ownership.

The report suggests that the U.S. asset management industry is likely to be a promising market for Bitcoin ETF trading. As of October 2023, the total capitalization of assets under management held by U.S. brokers, banks, and other private firms amounts to $48.3 trillion.

Bitcoin ETF-based instruments will enable investors to access digital currency through a list of approved partner companies, predominantly composed of reputable investment funds and banks, according to Galaxy Digital analysts.

Galaxy Digital is a digital asset management company established by Mike Novogratz in 2018 following his departure from Goldman Sachs Bank. In April of this year, Novogratz predicted that Bitcoin would surge to $40,000 if the U.S. Federal Reserve (Fed) started reducing interest rates.

Several major financial institutions have already applied for the launch of Bitcoin ETFs, with the first approvals potentially coming in the first quarter of 2024. CryptoQuant analysts estimate that if issuers allocate 1% of their assets to these ETFs, Bitcoin's price could increase to $50,000 to $70,000.